The big car industry news overnight is that agreement has been reached on the sale of the Chrysler half of DaimlerChyrsler. In one of the industries largest private equity deals Cerberus Capital Management has stepped up to the plate and purchased 80.1% of Chrysler for around AUD $7.6 billion.

This deal is an amazing AUD $35.7 billion below the price that Daimler-Benz paid for Chrysler back in 1998…The announcement of the deal overnight saw DaimlerChrysler shares rally by 6.4% on the German market.

We can expect to see the company’s name change to Daimler AG if approved by shareholders while the 2007 financials for DaimlerChrysler will take an AUD $4.7 billion dollar pounding as a result of the sale.

Cerberus will have an 80.1% equity interest in a new holding company called Chrysler Holding LLC with DaimlerChrysler retaining the remaining shares. Chrysler Holding LLC will have 100% ownership of the future Chrysler Corporation which would include Chrysler’s car making and financial arms.

America’s United Auto Workers union has given their approval of the sale.

“The transaction with Cerberus is in the best interests of our UAW members, the Chrysler Group and Daimler,” said UAW President Ron Gettelfinger.

Cerberus Capital Management is one of the largest private investment firms in the world and has investments in over 50 companies which generate AUD $71 billion in annual revenues.

“Cerberus believes in the inherent strength of US manufacturing and of the US auto industry,” said Cerberus Capital Management chairman John Snow. “Most importantly, we believe in Chrysler.”

Cerberus also has a 51% shareholding in GMAC, General Motor’s financing division. It remains to be seen what Cerberus can do with the troubled Chrysler.